Business Across Cultures: New Beginnings

With the successful conclusion of the 1999 MPR session, most people
in Indonesia are experiencing a new sense of optimism toward political stability,
economic recovery, and cooperation with foreign governments and the international
monetary institutions.

While there is still a long, long road
ahead to economic recovery, Indonesia has managed to implement one of
the best-case scenarios for political stability and diplomatic reappoachment.
In my years living and working here, I have been amazed on several occasions
at Indonesia's ability to find itself in very untenable positions and
then manage to pull its posterior out the proverbial fire. They have done
so again. All is not perfect and the future remains uncertain, but the
more disruptive of the possible political scenarios have been avoided
for the near-term.

Hopefully, political demonstrations and violence will ebb and travel
advisories will expire. Travel to Indonesia by business visitors should
no longer need be deferred by security concerns but rather be encouraged
by the opportunities existing here. Dependents and non-essential staff
should be able to return and enjoy the benefits of living in Indonesia.

All of this optimism is contagious and Indonesia has a way of throwing
up unexpected obstacles. However, just as Home Office often has a distorted
view of the problems faced by business here, they may have an overly optimistic
picture of the changes taking place here which can work to your advantage.

We on the ground have the responsibility to keep the situation in
better perspective: the very top has changed; the middle may follow; the
bottom will lag behind in a kind of reformation trickle-down theory.

How this affects the interpersonal relationships in international
offices and companies may be two fold: first, there is a new outspoken
trait in the character of many employees; second, there is an expectation
of change in the air with a growing sense that the employees deserve a
reward or some kind of compensation for the months and years of sacrifice
to the company during the economic crisis in the late 90s.

There was a popular joke in the New Order period that ran, “Why do
Indonesians have to go to Singapore to see a dentist?” The answer was,
“Because in Indonesia they are not allowed to open their mouths.”

This reflects one of the great changes that has occurred during the
reformation period. Indonesians of all walks of life now have an opinion
and are generally willing to share it. Moreover, many now feel it is their
right to voice their opinions and are still learning when and where and
at what level of intensity that expression is appropriate.

Employees of international companies that have tried to streamline
operations by laying off classes of employees have recently met with organized
resistance. This happens even if the company is legally compliant. For
example, a major European retail chain with operations throughout Indonesia
tried to replace its pool of 200 drivers. The drivers were all on contracts
properly executed and filed with the Manpower Ministry. The contract
terms ended and the contracts were not extended. Contractual compensation
was offered. In the West, this would be a simple and normally unarguable
question of contract law. In this case, however, the drivers involved
refused to be released. They coordinated and physically intimidated the
other contract personnel (the cleaning, maintenance, and security staff,
among others) to join them in an illegal, albeit effective strike. Manpower
and police refused to intervene, of course. As of the writing of this
column, the situation has yet to be resolved and the company continues
to operate without support staff.

The second point raised above presents different concerns. The permanent
staff of international companies have, at the very least, seen their purchasing
power parity drop to well below that of their expatriate counterparts.
Many have also taken pay cuts to aid the company through the difficult
economic times.

Many of these international companies have in the last two years used
the excuse that when the situation improves, the Indonesian employees
will be compensated for their loyalty. The concept of 'when the situation
improves' is not well defined. This leaves the interpretation open to
many definitions.

Upper management no doubt understands that the events of the last
few weeks, while extremely encouraging, have little to do with immediate
economic recovery. The rank and file may not see things in this same light.

Already, I have heard murmurings since the election and supposed return
to normalcy that employees deserve their promised benefits.

What is probably going to be difficult for most international companies
is to explain to their employees that little has changed in regard to
corporate profits and revenues.

The economic effects of the hoped-for political stability may not
be seen for several months or years. Companies in the Oil/Gas/Mining or
Agro-business industries, who may be realizing a wind-fall profit from
the current export possibilities and exchange rates, will hopefully be
able to address employee concerns more quickly.

Other companies may have to face a somewhat disenchanted work force.
A work force that may be expecting immediate increases in their base pay
and compensation package.

This remains a difficult question for most international companies
in Indonesia. If this is the case in your company, and you are not prepared
to give an immediate wage increase, a message should be sent to the employees,
either through writing or general meeting, that while the short-term outlook
has improved and you are looking forward to increased business activity,
this is not yet the time to be making benefit or wage increases. While
Indonesia has succeeded in overcoming some very difficult obstacles, the
effects have yet to be felt.

On a related and very important note, now is an appropriate time for
your office to arrange a Selamatan for the employees (a Selamatan is a
ritual meal in which members of a group participate to sustain, maintain
or instill order and harmony). If this is not appropriate, then perhaps
the long deferred staff party or a congratulatory event for the new president
and vice-president of Indonesia would be in order. Some act to observe
the transition from the old, new order to the new reformation era is expected.

This is a time of celebration for the vast majority of Indonesians.
Rightfully so. The apparently insurmountable challenges of having a fairly
free and transparent parliamentary election last June, of having a public
referendum and MPR approval on the East Timor question, of having a secret
ballot on President Habibie's accountability speech, and democratic votes
on the presidential and vice-presidential candidates shows that Indonesia
can overcome seemingly untenable positions thereby managing to pull its
posterior out the fire, again.

This article was generously contributed by George B. Whitfield, III when he was a Technical Advisor with Executive
Orientation Services.